Has a bank recently turned you down for financing? Businesses who either had their loan request declined or only partially approved, will now be able to apply for new financing administered by the Regional Development Corporation (RDC), which is the lending arm of the Erie County Industrial Development Agency (ECIDA). The recently enacted COVID-19 Emergency Relief Business Loans, establishes a total fund of $2 million with $500,000 carved out for retail businesses. The Program will provide much-needed relief to small businesses in Buffalo and Erie County so they can sustain their businesses and keep their workers employed by securing the capital they need.
The Dopkins Transaction Advisory Specialists are ready to assist business owners and their companies in accumulating the specific financial information required to complete an application in order to borrow up to $50,000. Under the RDC Relief Business Loans, businesses will receive favorable program terms such as a fixed interest rate of 2.50% and interest only payments for up to 12 months.
COVID-19 Emergency Relief Business Loans provides assistance to Erie County businesses financially impacted by a federal, state, or county declared disaster occurring either in or outside of Erie County. This is for businesses located in Erie County that have been denied or only received partial approval of their loan request from a bank. The business must have at least 5 full time equivalent employees prior to March 1, 2020.
When can I apply?
Starting April 20, 2020, businesses can apply for and receive funds to be used for working capital only.
How large can my loan be?
Loans can up to $50,000 and the minimum loan is $10,000.
What do I need to apply?
You will need to complete the Buffalo and Erie County RDC COVID-19 Disaster Loan Application and submit the application with the required documentation to an approved lender that is available to process your application by December 31, 2020. Click here for the Buffalo and Erie County RDC Covid-19 Disaster Loan Application
What Financial and Business Information do I need to provide?
You will need to provide the following:
- Business plan (or brief description and history of business)
- Reason for application
- Most recent business Federal Tax return including all schedules. If the 2019 tax returns are not available, provide 2018 tax returns and internally prepared 2019-yearend financial statements
- Interim Profit/Loss Statement and Balance Sheet
- Personal Financial Statements for any individual owning 20% or more of the business
- Schedule of all existing business debt
- Declination letter from bank of lending institution
- Federal regulations acknowledgment form
- Organizational/Legal Documents
- Certificate of Incorporation
- Bylaws and borrowing resolution
- Articles of Incorporation
- Operating Agreement and Borrowing Resolution
- Other Financial information that RDC staff deems appropriate
Are there any fees in applying?
Yes. Borrower is responsible for lender’s counsel fees, ECC filing fees, and credit report costs. These expenses can be deducted from the loan proceeds. The application fee is waived.
Where can I apply?
To apply call the RDC (the lending arm of Erie County Industrial Agency) at 716-856-6525, ext. 219.
Who can apply?
Businesses must be:
- For-profit business only (no residential) in operation a minimum of 2 years
- Business located in Erie County
- Able to document economic injury due to disaster declaration situation
- Business and principals must have acceptable credit histories and credit scores prior to the New York State Emergency Declaration
- Must have employed 5 full time employees or equivalents as of March 1, 2020
How long will this program last?
Although the program is open until December 31, 2020, we encourage you to apply as quickly as you can because there is a funding cap and RDC will need time to process your loan.
How many loans can I take out under this program?
What can I use these loans for?
You should use the proceeds from these loans on your working capital only. Examples of working capital include:
- Payroll costs, including benefits;
- Accounts Receivable;
- Accounts Payable;
- Rent; and
What is my interest rate?
2.50% fixed rate for the term of the loan. This is the lowest interest rate allowed by the RDC’s Federal Regulations.
When do I need to start paying my loan?
Interest only payments for up to 12 months. After the expiration of interest only period, the outstanding loan balance will convert into a 3-5-year term loan.
When is my loan due?
In 3-5 years after interest only period.
Do I need to pledge any collateral for these loans?
Yes. Must be secured to the extent possible. A lien on all business assets may be required at a minimum.
Do I need to personally guarantee this loan?
Yes, required for all individuals of the business owning 20% or more.
The Dopkins Transaction Advisory Specialists and our Financial Advisory Service Team is here to assist you in accessing liquidity and how to respond to changed business circumstances in light of COVID-19 while navigating the terms and conditions of the emergency loan programs identified above. Our team focuses on helping business owners and companies identify and secure short-term and long-term capital. Whether it’s domestic or foreign A/R, inventory, purchase order, construction, mezzanine financing, term loans and equity, our team has multiple sources of financing that will provide solutions to our clients.
For a printable copy of this article, please click here.
For more information, contact Joseph Heim at email@example.com.
About the Author
Joseph A. Heim CFE, CPA
Joseph Heim has over 25 years' experience investigating matters involving white-collar crime, fraud and corruption. He provides forensic accounting, litigation support and expert witness services to businesses, attorneys and commercial finance lenders. He is the Partner in charge of Dopkins Asset Based Lending Consulting Services.